How much can I afford?

Determining your ability to comfortably pay monthly mortgage payments is something for which lenders will use established guidelines. A general rule is that a household's mortgage payment should not exceed 36 percent of its income on all its debt, which includes the monthly mortgage payment; and that the mortgage itself should not exceed 28 percent of the household income.

Remember, if you are purchasing a home with a spouse or other partner, you can include that person's income (and, of course, consider his or her debts) when computing the cost of the home you can afford. Mortgage calculators can be great tools when making these calculations.